Singapore Dollar-Backed Stablecoin XSGD Launches on Coinbase

XSGD, the only stablecoin backed by the Singapore dollar, officially launched on the cryptocurrency exchange Coinbase on October 1, 2023. This debut comes as interest in digital assets continues to grow in Singapore. Issued by StraitsX since 2020, XSGD is pegged to the Singapore dollar at a 1:1 ratio and is fully backed by reserve assets held by DBS and Standard Chartered banks.

Stablecoins, designed to maintain a consistent value, are typically pegged to fiat currencies like the US dollar and are less volatile than other cryptocurrencies. According to BlackRock, stablecoins constitute about 7 percent of the overall cryptocurrency market. The demand for blockchain-based stablecoins is rising globally, with numerous companies exploring the launch of their own versions.

Market Trends and Regulatory Developments

The global stablecoin market recently reached a significant milestone value of US$250 billion, with projections suggesting it could expand to US$2 trillion by 2028, according to estimates by Standard Chartered. In 2023, the Monetary Authority of Singapore (MAS) introduced a regulatory framework for stablecoin issuers and is currently working on legislative amendments to formalize this framework, with a public consultation scheduled later this year.

StraitsX emphasized that XSGD’s launch on Coinbase facilitates instant crypto-to-SGD transactions for businesses, tourists, and digital platforms in Singapore. Usman Naeem, global head of derivatives sales and agency trading at Coinbase, noted that as cryptocurrency evolves beyond a trading asset, the importance of local stablecoins pegged to national currencies grows. He stated, “This allows local fiat to be on-ramped into the crypto economy without having to do an FX (foreign exchange) in between.”

Naeem expressed optimism about the growth of stablecoin transaction volumes and indicated that Singapore is at the forefront of cryptocurrency regulation in the region. “MAS is extremely forthcoming with engaging with corporates, including Coinbase,” he added, highlighting the eagerness of local residents and businesses to participate in the digital economy.

XSGD Powers First Stablecoin Payment Service

On October 3, XSGD became the foundation for Singapore’s first stablecoin scan-to-pay service, OKX Pay, launched by the US-based cryptocurrency exchange OKX. This service allows customers to make payments in stablecoins to merchants using the Grab payments platform. For the first time, GrabPay merchants in Singapore will accept direct stablecoin payments.

OKX Pay users can utilize USDC and USDT stablecoins by scanning SGQR codes, which is Singapore’s unified payment QR code system. These payments will be converted to XSGD before merchants receive the funds in Singapore dollars. Gracie Lin, CEO of OKX Singapore, described the country as an exciting space for stablecoin innovation, citing its strong foundations in both traditional finance and digital assets.

Lin explained, “We built the bridge, and for users who have stablecoin and want to use stablecoin for daily use, they can. Then, the merchant doesn’t have to change anything on their side.” She added that global standards are increasingly being established, as regulators seek to ensure the sustainable development of stablecoins while protecting those who engage with them.

Looking ahead, new regulations in the United States are anticipated to influence the stablecoin market. The GENIUS Act, signed into law by former US President Donald Trump in July, mandates that stablecoins must be fully backed by liquid assets, including US dollars and short-term US Treasury bills. Issuers will be required to disclose the composition of their reserves monthly, providing greater transparency and certainty in the sector.

Gracie Lin noted that while the Act benefits US dollar-backed stablecoins, it also sets a clear standard that could be adopted globally, benefiting all players in the market. Usman Naeem acknowledged that the new regulations would compel companies like Coinbase to enhance their offerings for users.

In summary, the launch of XSGD on Coinbase marks a pivotal moment for the cryptocurrency landscape in Singapore, reflecting the country’s proactive approach to regulation and digital asset integration. As stablecoins gain traction, the developments in Singapore could serve as a model for other regions navigating the complexities of digital currencies.